China's Uber Rival Didi Scores $7 Billion in Fundraising

HONG KONG—China's homegrown competitor to Uber Technologies Inc. has raised $7 billion in its latest fundraising effort, giving it a host of powerful allies including Apple Inc. to fend off the global ride-hailing champion locally.

Didi Chuxing Technology Co., the country's biggest ride-sharing company, closed a $4.5 billion fundraising round that attracted $1 billion from Apple and $600 million from China's top life insurer, according to people familiar with the situation. The round values the company at more than $25 billion, they said.

In addition, Didi has secured a $2.5 billion debt package from China Merchants Bank Co., according to one of the people.

The fundraising will leave Didi flush with cash to help it battle Uber in China's competitive ride-hailing market. The ride-sharing company will now have more than $10 billion in cash on hand following the new fundraising round through equity and debt, according to one of the people.

Uber and Didi are duking it out for China's potentially lucrative ride-sharing market by spending huge sums to attract drivers and passengers to their competing services. The battle between Uber and Didi for global investment allies has only intensified in recent months. Uber raised $3.5 billion from the investment arm of Saudi Arabia earlier this month as part of a $5 billion financing round, the largest to date raised by a private, venture-backed company.

Uber is separately turning to the so-called leveraged-loan market for the first time to raise as much as $2 billion, The Wall Street Journal reported. Uber has hired Morgan Stanley and Barclays PLC to sell a so-called leveraged loan of $1 billion to $2 billion to institutional investors in the coming weeks, according to people familiar with the matter.

While Uber's business in China has expanded rapidly over the past year, the company still faces an uphill battle against Didi, which not only has a larger share of the private car-hailing market where Uber competes, but also dominates the country's taxi-hailing segment.

Didi, which was formed last year by the merger of two rival Chinese taxi-hailing apps, is backed by powerful domestic and foreign investors. Its lengthening list of investors includes two of China's biggest internet companies—e-commerce company Alibaba Group Holding Ltd. and social-network company Tencent Holdings Ltd., as well as Apple. Tencent and Alibaba both put additional money into the latest fundraising round, according to people familiar with the situation, without disclosing the exact amount.

Other big investors in the round included several Chinese banks and insurance companies that made investments of more than $100 million each, according to one of the people.

As the two biggest ride-hailing companies scour the globe for capital, a few of the same investors are putting money into both companies.

China Life Insurance Co., the state-owned insurer that this month invested in Didi, had already invested in San Francisco-based Uber last year. China-based investment firm Hillhouse Capital Group was an early investor in Didi but also led a convertible-bond deal to invest in Uber's global operations. Similarly, Tiger Global Management LLC has backed Didi in China and has invested in Uber's global operations.

Competing startups dislike overlapping shareholder bases because the companies often share confidential strategy and financial results with investors. It is unclear what arrangements Didi and Uber have made for those investors.

Write to Juro Osawa at juro.osawa@wsj.com and Rick Carew at rick.carew@wsj.com

(END) Dow Jones Newswires

June 15, 2016 06:45 ET (10:45 GMT)

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